Thursday, October 8, 2015

Meet The New Recession Cycle.......A MUST READ!


Meet The New Recession Cycle - It's Triggered By Bursting Bubbles, Not Surging Inflation

The higher financial markets rise, the harder they will eventually 
fall. By any objective measurement, the stock market is currently well into bubble territory.  Anyone should be able to see this – all you have to do is look at the charts.  Sadly, most of us never seem to learn from history. 

Most of us want to believe that somehow "things are different this time". Well, about the only thing that is different this time is that our economy is in far worse shape than it was just prior to the last major financial crisis. That means that we are more vulnerable and will almost certainly
endure even more damage this time around.  

It would be one thing if stocks were soaring because the U.S. economy as a whole was doing extremely well. But we all know that isn't true. Instead, what we have been experiencing is clearly artificial market behavior that has nothing to do with economic reality. In other words, we are dealing with an irrational financial bubble, and all irrational financial bubbles eventually burst. The way that stocks have moved so far this year is eerily reminiscent of the way that stocks moved in early 2008.  The warning signs are there – if you are willing to look at them.

Today's clueless Keynesian central bankers essentially believe that they can keep the pedal-to-the-metal until a 1970's style inflationary spiral arises. But none is coming because  the worldwide central bank money printing spree of the last two decades has generated massive excessive capacity and malinvestment all around the planet. 

What is coming,is not their father's inflationary spiral, but an unprecedented and epochal global deflation. So the central banks just keep printing, thereby inflating the asset bubbles world-wide. What ultimately stops today's new style central bank credit cycle, therefore, is bursting financial bubbles. That has already happened twice this century. A third proof, looks to be just around the corner.

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